Safeguarding checks;

Page 1

26 HASKINS & SELLS April
Safeguarding Checks
THE season for the detection of cash
irregularities is in full swing. Each
day appear additional announcements that
some cashier or treasurer is short in his
accounts. Trusted employes with many
years of faithful service, officers with en­viable
records for efficient work, and pro­fessional
crooks alike, irrespective of age,
sex, or environment, have committed multi­farious
forgeries and embezzlements in­volving
amounts varying from a few hun­dred
dollars to several hundred thousand
dollars. Banks, clubs, churches, and in­dustrial
concerns, with systems of account­ing
and internal check of varying degrees of
efficiency, some audited annually and some
with little or no executive supervision,
have suffered in common as victims of these
manifold schemes. It would be difficult to
determine where operations of an improper
character will be discovered next. Certainly
no organization is immune to defalcations.
No organization, therefore, can afford to
neglect to take the precautions necessary
for the full protection of its resources.
It is estimated that six billion checks are
written annually and that from ninety to
ninety-five per cent of the business of the
nation is transacted by means of credit
instruments. Losses from forgeries and
embezzlements amount to approximately
3200,000,000 annually, divided about
equally between the two. The business
public bears a burden of over $600,000 each
business day by reason of these two crimes,
in addition to the costs incurred in carrying
on fidelity and surety companies.
In general, financial crimes are promoted
by opportunity. They seldom occur if
proper safeguards are rigidly enforced. So
far as the number of instruments is con­cerned,
the opportunities for misappro­priations
are unlimited. The principal
effort should be devoted to procedures de­signed
to prevent fraudulent occurrences
rather than to the detection of fraud.
Checks written by hand on plain paper
may be raised with comparatively little
difficulty. There are several devices avail­able
to reduce the possibility of altering
checks. Various machines may be had
which protect the amount and frequently
the payee's name. The latter feature is
important because the payee's name is
changed about as often as the amount.
These protective machines are similar in
that the letters or figures are cut into the
paper and printed with indelible ink.
These appliances are not infallible. The
corrugations in the paper may be straight­ened
out and a word of equivalent length
inserted for one which has been erased.
But they are of sufficient protective value
in eliminating the danger of altered checks
to justify their use.
Then there are pantagraph checks which
are simply paper lithographed with inks
which are mixed so as to be highly sensitive
to alteration. Pantagraphs are tinted
usually in the form of a series of small inter­woven
designs, frequently made distinctive
by representing the trade-mark of the user.
One disadvantage in the use of such checks
is that the reverse side often is left blank